Pan African lowers full-year production guidance, announces fatality

South African gold miner Pan African Resources downwardly-revised its production guidance for the financial year ending 30 June on Friday, alongside the imminent start of construction at the Mintails project.

The AIM-traded firm reduced its production guidance for the 2023 financial year down to approximately 175,000 ounces of gold.

It put the revision down to a number of factors, including difficulties related to the supply of electricity from Eskom, South Africa's national power utility.

The challenges had resulted in a production loss of around 10,000 ounces of gold.

It also noted that continuous operations at Barberton Mines faced a slower-than-anticipated ramp-up, which had now been largely addressed, while the underground operations at Evander Mines yielded lower production than expected.

However, the tailings operations at Barberton and Elikhulu were performing in line with expectations.

Looking further ahead, Pan African was now projecting a group production guidance of between 178,000 and 190,000 ounces of gold for the year ending 30 June 2024.

Additionally, with the commissioning of the Mintails project in the first half of the financial year, the firm anticipated a further increase in production in the 2025 fiscal period.

On the safety front, and despite progress made in improving in that area, Pan African reported a fatal accident at Evander Mines in March, resulting from a fall of ground incident.

The company said the incident occurred after the operation had achieved one million fatality-free shifts.

However, the board said it expected an overall improvement in group safety rates for the full year, compared to the first half of the current financial year, due to various initiatives implemented to enhance its safety performance.

“The safety of our people and contractors remains our number one priority and we continue to implement a number of programmes to further improve the safety performance at our operations,” said chief executive officer Cobus Loots.

“We are deeply saddened by the fatal accident that occurred at Evander Mines as a result of a fall of ground incident.

“Whilst we are disappointed with the production performance of our underground operations for the current financial year, the turnaround at Barberton Mines is now evident, especially in the past two months, following a longer-than-anticipated ramp-up after the implementation of continuous operations at Fairview Mine and Sheba Mine and implementation of the contractor mining model at Consort Mine.”

Loots said the underground tonnage at Barberton had demonstrated a notable increase over the last two months, with further increases expected during the rest of the current financial year.

“Implementation of the contractor mining model at Consort Mine is also bearing fruit and the operation is expected to return to profitability in the short term.

“Pan African is leading the way in terms of rolling out renewable energy projects and reducing our dependence on Eskom.

“In the coming years, we believe this strategy will greatly benefit all of our stakeholders.”

At 1307 BST, shares in Pan African Resources were down 19.89% at 13.52p.

Reporting by Josh White for Sharecast.com.